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Fed interest rate hike devastating to LatAm: Mexican academic

English.news.cn   2015-12-24 11:19:01

MEXICO CITY, Dec. 23 (Xinhua) -- The U.S. Federal Reserve's recent decision to raise interest rates would have a devastating impact on Latin America, according to a Mexican academic this week.

Alfredo Jalife-Rahme, professor of political science at Mexico's National Autonomous University (UNAM) and author of numerous books, believed the move would lacerate regional economies.

In an article published earlier this week in various regional news outlets under the headline "U.S. Fed's global currency war: Latin America against the ropes," Jalife-Rahme warned the "unilateral" decision would cause "cataclysmic collateral damage" and have "profound geopolitical implications in the rest of the catatonic planet, in particular in Latin America."

Due to the U.S. dollar's "pernicious hegemony," any decision the Fed, the "de facto global central bank," made was bound to impact world economies, explained the academic.

The quarter of a percentage rate hike announced this month would be followed by similar increments throughout 2016 to reach a target rate of 1.375 percent, according to the Fed, wrote Jalife-Rahme.

"Will the world and 'Mexico's neoliberal (camp)' withstand another four consecutive quarter-point increases when the first led to the bankruptcy of ICA, one of the leading construction firms in Latin America?" asked the author.

Mexico's dependency on U.S. monetary policy had led to Mexican peso plummeting nearly 30 percent in less than a week, according to the New York Times, noted Jalife-Rahme.

U.S. global intelligence agency Strategic Forecasting, better known as Statfor, "acknowledged that the Fed handles the rates in an egotistical and unilateral way, with no consideration for the cataleptic state of the rest of the planet," wrote the author.

Peter Spence, writing for British the Daily Telegraph, said "the countries most vulnerable to the measure are 'Brazil, Chile and South Africa,'" wrote Jalife-Rahme.

According to the financial journalist, said the author, "the emerging markets could be particularly vulnerable as many of them have amassed enormous quantities of debt (that) could be unmanageable."

Both Brazil and South Africa were members of the BRICS bloc of emerging economies, which "fuels the theory that the Fed hike is collaterally intended to squarely hit them," he said.

"The real problem," wrote the author, lay in the 9 trillion U.S. dollars in foreign debt that countries had accumulated, and the political fallout, as seen in Venezuela and Argentina, where the ruling parties recently took a beating at the polls.

"Are we facing a global currency war waged by the Fed against the rest of the catatonic world?" asked Jalife-Rahme.

Far from bolstering the global economy, "the Fed hike has pushed the world dangerously into uncharted waters," the academic concluded.

Related:

News Analysis: Fed rate rise to see heightened volatility for 2016

NEW YORK, Dec. 20 (Xinhua) -- With the new year right around the corner, many analysts expected volatility could rise in financial markets after U.S. Federal Reserve's first rate hike in nearly a decade.

The U.S. central bank announced early this week raising benchmark interest rate by 25 basis points, the first rate hike since 2006, marking the end of an era of extraordinary easing monetary policies. Full story

Fed interest rate hike triggers similar rises in Mexico, Chile

MEXICO CITY, Dec. 17 (Xinhua) -- After the U.S. Federal Reserve raised interest rates by 0.25 percent on Wednesday, the first rise in almost 10 years, the central banks of Mexico and Chile followed suit on Thursday.

Mexico responded to its neighbor's optimism by raising rates by 0.25 percent to reach 3.25 percent, which was Mexico's first interest rate hike since 2008.Full story

U.S. Fed raises federal funds rate by 25bp, first rate hike since 2006

WASHINGTON, Dec. 16 (Xinhua) -- U.S. Federal Reserve on Wednesday decided to raise benchmark interest rate by 25 basis points, the first interest rate increase since 2006,marking the end of an era of extraordinary easing monetary policy.

Given the considerable improvement in labor market conditions this year and it's reasonably confident that inflation will rise, the central bank decided to raise the target range for the federal funds rate to 0.25-0.5 percent, the Fed said in a statement after concluding a two-day policy meeting on Wednesday. Full story

Editor: xuxin
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Fed interest rate hike devastating to LatAm: Mexican academic

English.news.cn 2015-12-24 11:19:01

MEXICO CITY, Dec. 23 (Xinhua) -- The U.S. Federal Reserve's recent decision to raise interest rates would have a devastating impact on Latin America, according to a Mexican academic this week.

Alfredo Jalife-Rahme, professor of political science at Mexico's National Autonomous University (UNAM) and author of numerous books, believed the move would lacerate regional economies.

In an article published earlier this week in various regional news outlets under the headline "U.S. Fed's global currency war: Latin America against the ropes," Jalife-Rahme warned the "unilateral" decision would cause "cataclysmic collateral damage" and have "profound geopolitical implications in the rest of the catatonic planet, in particular in Latin America."

Due to the U.S. dollar's "pernicious hegemony," any decision the Fed, the "de facto global central bank," made was bound to impact world economies, explained the academic.

The quarter of a percentage rate hike announced this month would be followed by similar increments throughout 2016 to reach a target rate of 1.375 percent, according to the Fed, wrote Jalife-Rahme.

"Will the world and 'Mexico's neoliberal (camp)' withstand another four consecutive quarter-point increases when the first led to the bankruptcy of ICA, one of the leading construction firms in Latin America?" asked the author.

Mexico's dependency on U.S. monetary policy had led to Mexican peso plummeting nearly 30 percent in less than a week, according to the New York Times, noted Jalife-Rahme.

U.S. global intelligence agency Strategic Forecasting, better known as Statfor, "acknowledged that the Fed handles the rates in an egotistical and unilateral way, with no consideration for the cataleptic state of the rest of the planet," wrote the author.

Peter Spence, writing for British the Daily Telegraph, said "the countries most vulnerable to the measure are 'Brazil, Chile and South Africa,'" wrote Jalife-Rahme.

According to the financial journalist, said the author, "the emerging markets could be particularly vulnerable as many of them have amassed enormous quantities of debt (that) could be unmanageable."

Both Brazil and South Africa were members of the BRICS bloc of emerging economies, which "fuels the theory that the Fed hike is collaterally intended to squarely hit them," he said.

"The real problem," wrote the author, lay in the 9 trillion U.S. dollars in foreign debt that countries had accumulated, and the political fallout, as seen in Venezuela and Argentina, where the ruling parties recently took a beating at the polls.

"Are we facing a global currency war waged by the Fed against the rest of the catatonic world?" asked Jalife-Rahme.

Far from bolstering the global economy, "the Fed hike has pushed the world dangerously into uncharted waters," the academic concluded.

Related:

News Analysis: Fed rate rise to see heightened volatility for 2016

NEW YORK, Dec. 20 (Xinhua) -- With the new year right around the corner, many analysts expected volatility could rise in financial markets after U.S. Federal Reserve's first rate hike in nearly a decade.

The U.S. central bank announced early this week raising benchmark interest rate by 25 basis points, the first rate hike since 2006, marking the end of an era of extraordinary easing monetary policies. Full story

Fed interest rate hike triggers similar rises in Mexico, Chile

MEXICO CITY, Dec. 17 (Xinhua) -- After the U.S. Federal Reserve raised interest rates by 0.25 percent on Wednesday, the first rise in almost 10 years, the central banks of Mexico and Chile followed suit on Thursday.

Mexico responded to its neighbor's optimism by raising rates by 0.25 percent to reach 3.25 percent, which was Mexico's first interest rate hike since 2008.Full story

U.S. Fed raises federal funds rate by 25bp, first rate hike since 2006

WASHINGTON, Dec. 16 (Xinhua) -- U.S. Federal Reserve on Wednesday decided to raise benchmark interest rate by 25 basis points, the first interest rate increase since 2006,marking the end of an era of extraordinary easing monetary policy.

Given the considerable improvement in labor market conditions this year and it's reasonably confident that inflation will rise, the central bank decided to raise the target range for the federal funds rate to 0.25-0.5 percent, the Fed said in a statement after concluding a two-day policy meeting on Wednesday. Full story

[Editor: huaxia]
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